A nonprofit and a nurses union filed a lawsuit seeking to block Horizon Blue Cross Blue Shield's reorganization into a nonprofit mutual holding company, the New Jersey Monitor reported Dec. 14.
New Jersey granted Horizon approval to the reorganization in November, but the lawsuit argues the state's Department of Banking and Insurance incorrectly found that the change would not lead to higher insurance premiums, according to the report.
As part of the reorganization, Horizon will pay the state $600 million in June to make up for a $50 million reduction in its annual tax burden and will pay another $625 million over the next 17 years, according to the report. Horizon also got approval to spend $300 million to create for-profit subsidiaries and other investments, such as medical practices.
The groups filing the lawsuit — New Jersey Citizen Action and Health Professionals and Allied Employees — argue that the payments and the $300 million in spending are functionally a tax increase and will increase premiums, according to the report.
Horizon is not a party in the lawsuit, according to the report. A spokesperon declined to comment to the outlet on the lawsuit. The Department of Banking and Insurance also declined to comment.